United States securities and exchange commission logo
May 26, 2023
Diego Rojas
Chief Executive Officer
HNR Acquisition Corp
3730 Kirby Drive, Suite 1200
Houston, TX 77098
Re: HNR Acquisition
Corp
Amendment No. 1 to
Preliminary Proxy Statement on Schedule 14A
Filed May 15, 2023
File No. 001-41278
Dear Diego Rojas:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Amendment No. 1 to Preliminary Proxy Statement on Schedule 14A filed May
15, 2023
Summary of the Proxy Statement
Opinion of RSI & Associates, page 26
1. We note disclosure on
pages 26 and 95 appears to indicate that the Cobb and Associates
3rd Party Engineering
Study dated September 30, 2022 is included in this Proxy
Statement; however, we
are unable to locate the referenced reserve report. Please revise
the Proxy Statement to
include the referenced report. Alternatively, remove the statement
that the report is
included.
Summary Historical Financial Information of HNRA, page 31
2. Please modify the
paragraphs preceding the summary of the historical financial
information of HNRA to
indicate the selected historical financial data for the years ended
December 31, 2022, 2021
and 2020 have been derived from HNRA s audited rather than
unaudited financial
statements and only the financial statements as of and for the years
Diego Rojas
HNR Acquisition Corp
May 26, 2023
Page 2
ended December 31, 2022 and 2021 are included elsewhere in this proxy
statement. The
financial statements as of December 31, 2020 and for the period from
December 9, 2020
through December 31, 2020 are no longer presented in the amended
proxy. In addition,
please change the filing date of HNRA's Form 10-K for the fiscal year
ended December
31, 20222 to March 31, 2023.
Similarly, please modify the preceding paragraphs to the summary of
historical financial
information of Pogo on page 33 to indicate the financial data as of
and for years ended
December 31, 2022, 2021 and 2020 have been derived from audited
financial statements
and only the financial statements as of and for years ended December
31, 2022 and 2021
are included elsewhere in the proxy.
Risk Factors
HNRA has extended the period of time by which it must complete its initial
business
combination to June 15, 2023, page 60
3. We note you disclose that your stockholders approved an amendment to
your certificate of
designation to allow up to six one-month extensions to November 15,
2023 on May 11,
2023. We further note that your Form 8-K filed May 16, 2023 states
that in connection
with such amendment stockholders holding 4,115,597 shares of common
stock exercised
their right to redeem their shares and approximately $43 million was
removed from the
trust account to pay such holders. Please update your filing
accordingly. If a vote in favor
of the Purchase is assured by virtue of the SPAC Stockholder Support
Agreement, please
revise to clarify this point.
Unaudited Combined Pro Forma Financial Information
Introduction, page 65
4. Please clarify that a reader may refer to HNRA's audited financial
statements and related
footnotes and Management s Discussion and Analysis for the year
ended December 31,
2022 included in the proxy statement as well as in its Form 10-K for
the year ended
December 31, 2022 filed with the SEC on March 31, 2023.
5. We note you state that the unaudited pro forma combined financial
information does not
reflect any adjustments related to the results of the special meeting
of the stockholders of
HNRA on May 11, 2023. Please revise your pro forma financial
statements to include
adjustments for actions taken at the special meeting to the extent
such actions are
necessary for the completion of the business combination.
Unaudited
FirstName Pro Forma Consolidated
LastNameDiego Rojas Balance Sheet, page 67
Comapany
6. NameHNR
Please Acquisition
revise your pro formaCorp
balance sheet to include the Redeemable
Common Stock line
item as it appears
May 26, 2023 Page 2 to have been inadvertently omitted.
FirstName LastName
Diego Rojas
FirstName LastNameDiego Rojas
HNR Acquisition Corp
Comapany
May NameHNR Acquisition Corp
26, 2023
May 26,
Page 3 2023 Page 3
FirstName LastName
Note 5 - Pro Forma Earnings per Share, page 73
7. We reissue or prior comment 14 in its entirety as footnote (1) to your
tabular disclosure of
the pro forma earnings per share computation continues to refer to the
pro forma loss per
share and does not explain why the public and private warrants are
anti-dilutive. This
comment also applies to similar disclosure on page 36.
Fairness Opinion of RSI & Associates, Inc., page 95
8. We note your revised disclosure in response to prior comment 19 states
that RSI
& Associates reviewed post-Purchase financial projections of Pogo
based on the
September 30, 2022 Cobb Report. Please revise to clarify who prepared
the reports. In
that regard, we note Annex C states that the financial projections
were prepared by
HNRA.
9. We note your response to prior comment 20 and reissue the comment in
part. Please
revise your disclosure to discuss each of the material analysis
conducted by RSI
& Associates, including the analysis of public transactions of a
comparable nature and the
financial and stock information of other companies. Please ensure you
provide support for
the ultimate conclusions reached in each analysis. Refer to Item 4(b)
of Form S-4 and
Item 1015(b)(6) of Regulation M-A.
Interests of HNRA's Directors and Officers in the Purchase, page 98
10. We note your added disclosure in response to prior comment 40. Please
revise to include
this disclosure in your summary under "Interests of Certain Person in
the Purchase. We
also note you disclose that JVS Alpha Property, LLC owns 940,000
shares of SPAC
Common Stock, and is controlled by Joseph V. Salvucci, Jr., an
independent director of
the Company. Please revise to additionally include the current value
of such shares.
Information About Pogo
Summary of Reserves, page 116
11. The line-item header ( Estimated Proved Developed Reserves ) shown
in the tabular
presentation on page 116 appears to represent the net quantities of
proved developed
producing reserves. Please review and revise your disclosure as
necessary.
Acreage and Ownership
Leasehold Acreage, page 120
12. We have reviewed your response to comment 26 and the revised acreage
disclosure on
page 120. We note you identify all of your acreage as developed;
however, the discussion
on page 112 and the disclosure on page 116 indicates certain reserves
as of December 31,
2022 have been classified as undeveloped. Please note the acreage
associated with your
undeveloped reserves that is held by production should be classified
as undeveloped
Diego Rojas
FirstName LastNameDiego Rojas
HNR Acquisition Corp
Comapany
May NameHNR Acquisition Corp
26, 2023
May 26,
Page 4 2023 Page 4
FirstName LastName
acreage for purposes of disclosure under Item 1208(b) of Regulation
S-K. Please modify
your disclosure as necessary to resolve any inconsistencies in the
classification of your
acreage. Refer to the disclosure requirements in Item 1208 of
Regulation S-K.
Management s Discussion and Analysis of Financial Condition and Results of
Operations of
Pogo
Overview, page 130
13. We have read your response to comment 31 and note the revised
disclosure of gross/net
acreage on page 130 of "13,700 gross (13,700 net) acres with an
average working interest
of 100%"; however, the disclosure included in the Opinion of RSI &
Associates on Annex
C-2 still contains net acreage of 11,508 acres. Please review and
revise your disclosure as
necessary.
Results of Operations, page 131
14. We note the disclosure of the average sales prices for oil, natural
gas, and on a boe basis
excluding settle commodity derivatives shown on page 132 and the lease
operating
expenses on a $ per boe basis shown on page 132 and as noted on page
133 for the year
ended December 31, 2021 appear to be inconsistent with the comparable
figures shown
elsewhere on page 118. Please revise your disclosure to correct the
inconsistency or tell us
why a revision is not needed.
Managements Discussion and Analysis of Financial Condition and Results of
Operations
Cash Flows, page 135
15. Please revise your table depicting sources and uses of cash for the
year ended
December 31, 2021 to include the amount of the net change in cash and
cash equivalents.
Beneficial Ownership of Securities, page 170
16. Please expand your disclosure to disclose your Sponsor's ownership
interest and present
the expected beneficial ownership following the Purchase under both
the no redemption
and maximum redemption scenarios.
Pogo Resources, LLC
Notes to the Consolidated Financial Statements
Note 12. Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited)
Reserve Quantity Information,, page F-41
17. Your explanation of the changes that occurred due to Revisions of
Previous Estimates
for the year ended December 31, 2021 indicates the overall increase is
primarily
attributable to improved performance revisions and other items and is
partially offset by a
decrease attributable to lower commodity prices.
Diego Rojas
HNR Acquisition Corp
May 26, 2023
Page 5
Please revise your discussion to identify and quantify each individual
factor that
contributed to the overall change in the line item. If two or more
unrelated factors are
combined to arrive at the overall change, your revised disclosure
should separately
identify and quantify each factor, including offsetting factors, so
that the change in net
reserve quantities between periods is fully explained. Refer to the
disclosure requirements
in FASB ASC 932-235-50-5.
Standardized Measure of Discounted Future Net Cash Flows,, page F-43
18. We have read your response to comment 37 and note you omit your asset
retirement costs
as part of the future development costs used in the calculation of
your standardized
measure.
Please note that disclosure of the standardized measure and each of
the individual line
items, and the related components specific to the calculation of the
measure, are required
pursuant to FASB ASC 932-235-50-31 parts a through f. Furthermore, the
definition of
Discounted Future Net Cash Flows Related to Proved Oil and Gas
Reserves which
references disclosure under FASB ASC paragraphs 932-235-50-30,
932-235-50-31, and
932-235-55-6 states that future cash flows related to the
settlement of an asset retirement
obligation are included in the disclosure and does not specify that
selected costs may be
excluded in the calculation based on a preconditioned outcome or
impact based on
materiality. Refer to FASB ASC 932-235-50-31 and the Amendments to the
XBRL
Taxonomy, Accounting Standards Update No. 2010-03 Extractive
Activities-Oil and Gas
(Topic 932).
The requirement pursuant to FASB ASC 932 is also consistent with
guidance provided by
the Division of Corporation Finance in the letter dated February 2004
to registrants
primarily engaged in the production of oil and gas regarding the
preparation of their
filings with the Commission. The letter indicates the staff believes
that an entity should
include the future cash flows related to the settlement of an asset
retirement obligation in
its standardized measure disclosure. The letter also indicates that
the requirement to
disclose net cash flows relating to an entity s interest in
oil and gas reserves [pursuant to
FASB Statement No. 69, paragraph 30] requires an entity to include the
cash outflows
associated with the settlement of an asset retirement obligation
and that the exclusion of
the cash flows associated with a retirement obligation would be a
departure from the
required disclosure.
Please revise your disclosure for each period presented to accurately
reflect all estimated
future costs, including the costs that will be incurred to settle your
asset retirement
obligations, e.g. the costs for dismantlement, restoration, and
abandonment of the existing
FirstName LastNameDiego Rojas
wells (including both active and inactive wells on leases and future
proved undeveloped
Comapany NameHNR
locations) Acquisition
and related Corp This comment applies to the
disclosure on page 75, F-43
equipment.
May 26,and the Page
2023 reserves
5 reports included as Annex D and E, respectively.
FirstName LastName
Diego Rojas
FirstName LastNameDiego Rojas
HNR Acquisition Corp
Comapany
May NameHNR Acquisition Corp
26, 2023
May 26,
Page 6 2023 Page 6
FirstName LastName
Exhibits
19. We note your response to prior comment 39; however, we reissue our
comment in part as
we are unable to locate the disclosure revisions to the reserves
report prepared by William
M. Cobb & Associates, Inc. as of December 31, 2021 presented in the
Proxy Statement as
Annex D. Please obtain and file as revised reserve report that
complies with the
requirements in Item 1202(a)(8) of Regulation S-K.
General
20. We note your added disclosure in response to prior comment 51,
indicating that the SPAC
Stockholders aggregate voting power is 3,006,250 shares of SPAC
Common Stock.
Please revise to present this figure as a percentage.
21. We note your response to prior comment 42 and reissue in part. Clarify
whether recent
common stock trading prices exceed the threshold that would allow the
company to
redeem public warrants.
22. We note your response to prior comment 49, indicating that the fair
value of the warrants
that may be retained by redeeming shareholders is $880,000 based on
recent trading
prices, and 8,625,000 warrants held by Public Shareholders. Please
revise to include such
disclosure in your filing. Also, identify any material resulting
risks.
23. We note your revised disclosure in response to prior comments 5 and
43. Please further
revise to quantify the Founder shares and the Private Placement shares
held by the
Sponsor.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Jenifer Gallagher, Staff Accountant, at (202) 551-3706
or John
Cannarella, Staff Accountant, at (202) 551-3337 if you have questions regarding
comments on
the financial statements and related matters. You may contact Sandra Wall,
Petroleum Engineer,
at (202) 551-4727 or John Hodgin, Petroleum Engineer, at (202) 551-3699 with
questions
regarding the engineering comments. Please contact Liz Packebusch, Staff
Attorney, at (202)
551-8749 or Karina Dorin, Staff Attorney, at (202) 551-3763 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Energy
& Transportation
cc: Matthew Ogurick